Source: Stephanie Clifford and Andrew Martin from the Green Blog by The New York Times
These days, it seems, the provenance of green products matters.
Manufacturers who have long aligned themselves with environmental causes, like Seventh Generation and Method, have rebounded better from the recession than the “green” lines of larger, more traditional manufacturers.
Analysts say the reason is that the niche manufacturers tend to attract serious green customers who want products that are good for the environment even if they cost more. And if these customers find that a botanical ingredient isn’t quite as effective as bleach, they believe it is better for their house and lungs.
As we report in an article in The Times, sales of green products over all dropped during the recession. But the committed customers have been quicker to come back to environmentally friendly products, compared to the much larger audience of mainstream customers, who may have been willing to buy green products when times were flush but scaled back when price started to matter.
“If you were a hardcore ‘X’ user and the green brand came out and it was on sale, you gave it a shot, but you really weren’t committed to the movement,” said Eric Ryan, co-founder of Method. “Versus the pure plays like ourselves — we brought in the early adopters that were committed to either making a shift for the environment or for the health of the home environment, and we’ve built it over time.”
Mr. Ryan said sales of Method products were up 20 percent in 2010, excluding comparisons to products like air fresheners that Method discontinued. Method sales were relatively flat in 2009.
Similarly, sales of Seventh Generation rebounded to “solid double-digit growth” in 2010, after a relatively meager 2 percent gain in 2009, said John Replogle, chief executive.
He attributed the rather sluggish sales in 2009 — which compared to a 50 percent increase in 2008 — with an influx of new competition and the economy’s near collapse.
“We definitely watched the consumer trade to value for a period of time,” he said, adding that the cycle lasted about 15 months.
Mr. Replogle said some major manufacturers might have struggled to gain traction in the green space because “the consumer didn’t see a compelling reason or point of difference.”
“As a result, they didn’t get repeat purchase,” he said.
Of course, not all of the major manufacturers who produced a green line are waving a white flag. Heidi Dorosin, vice president for marketing in the cleaning division of Clorox, noted that the company’s Green Works lineremained the market leader and that Clorox was committed to the brand’s growth.
She said Green Works adjusted its pricing so that it was never more than 20 percent higher than traditional cleaners. In addition, she said the company realized that the pricing had been inconsistent and confused consumers. Sometimes it the premium was more than 20 percent, sometimes it was less. (Method says its products are usually 25 percent higher than standard cleaners, because ingredients and containers are more expensive — recycled plastic costs more than new plastic. Also, smaller companies tend to have higher transportation and production costs than bigger ones, who can negotiate because of their size.)
Ms. Dorosin noted that overall spending on cleaning products was down, and she theorized it was because of the recession and a decline in home ownership. She said the overall category was down roughly 3 percent, as were green cleaners.
While competitors like Clorox, Church & Dwight and S.C. Johnson were hurrying to introduce green products around 2008, Procter & Gamble, the household products giant, decided it would not.
Len Sauers, vice president for global sustainability, said the company considered such a move five or six years ago. But in conducting market research about green products, what the company found was that “not many people bought them,” he said.
He said the company didn’t want to introduce more products into a category that was a relatively small portion of the overall market. He estimated that 15 to 20 percent of shoppers were willing to pay more, or lose some efficacy, for products with environmental attributes.
But Mr. Sauers said 70 percent or more of consumers in the United States were not willing to make those trade-offs for green products, though they would buy the products if they cost the same.
Procter & Gamble took another tack, at least with laundry detergent, and emphasized money-saving. Instead of labeling a product as green, itintroduced Tide Coldwater, which, as the name suggests, works with cold water instead of hot. In doing so, consumers can save as much as 80 percent of energy costs on every load, the company marketing says.
In the last year, retail sales of Tide Coldwater have increased 24 percent, he said, and Procter & Gamble recently added another variation, Tide Free for Coldwater, which doesn’t have any perfumes or dyes.